The effect of the order and the status of a lawsuit the General Retirement System and the Police and Fire Retirement System filed against Orr this week remain unclear because the bankruptcy filing puts a hold on litigation against Detroit. But one bankruptcy attorney said the hold might not apply to the pension funds’ suit because the city is not named as a defendant.

Orr’s decision to file for bankruptcy angered pension officials who felt he never made an effort to negotiate with them. Good-faith negotiations with creditors, such as the pension funds, are required under federal law in order for Detroit to be eligible for municipal bankruptcy.

“We are surprised and disappointed that the emergency manager would file a Chapter 9 petition before he has had substantial negotiations with the retirement systems and other significant creditor constituencies,” said Robert Gordon, an attorney with the Clark Hill law firm, which is representing the pension funds. “To be clear, the EM’s team and the retirement systems have not engaged in in-depth negotiations to date.”

The pension funds are expected to challenge Detroit’s eligibility for bankruptcy based on Orr’s failure to negotiate.

Attorneys for the city, in a court filing late Thursday, said the city can longer negotiate “with creditors because such negotiation is impracticable” and that it has “negotiated in good faith” with its creditors but failed to reach a resolution.

A spokesman for Orr said Thursday that the pension funds essentially rejected Orr’s restructuring proposal when they filed a lawsuit Wednesday to prohibit Orr from slashing pension benefits. The suit was based on pension officials’ stance that the state constitution protects accrued pension benefits and they cannot be cut.

Last month, Orr told Detroit’s 30,000 active and current retirees that the city could not afford to fulfill its pension obligations and that their pensions likely would be cut. He did not specify the cut,s but Orr said the city’s two retirement systems were underfunded by about $3.5 billion. The retirement funds dispute Orr’s figures.

Orr said during a news conference Thursday evening that he remains open to negotiations with the pension funds.

The status of the pension funds’ lawsuit against Orr and Gov. Rick Snyder remains in question.

Federal bankruptcy law says that all lawsuits against a city are automatically put on hold — or stayed — once that city files for bankruptcy.

However, the pension funds’ lawsuit names Orr and Snyder as defendants — not the city. That distinction could allow the funds’ lawsuit to proceed, which could hamper Orr’s plans to restructure the city’s pension debts.

“I don’t believe the City of Detroit was named as a defendant, so the automatic stay would not be applicable,” said Jay Welford, a bankruptcy attorney and partner at Southfield-based Jaffe Raitt Heuer & Weiss. “If the City of Detroit were named as a defendant, then the stay would automatically apply.”

A preliminary hearing for the pension funds’ lawsuit against Orr is scheduled for Monday in Ingham County Judge Rosemarie Aquilina’s courtroom.

Aquilina issued the temporary restraining order Thursday to prevent Orr and Snyder from taking further action to slash pension benefits. The order will remain in effect until Aug. 1.

But Orr has routinely contended that federal law trumps state law, adding to the legal complexity that a municipal bankruptcy creates.

While lawyers for the pension funds rushed to court Thursday to deal with the bankruptcy filing, some pension board members were stunned by the news.

George Orzech, chairman of the Police and Fire Retirement System, said there is little retirees can do now to protect their benefits.

“They can worry. They can pray,” Orzech said. “It’s in the hands of bankruptcy people now.”